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On July 9, President Biden signed a sweeping executive order to promote competition throughout the economy, including in the rail, ocean and air transportation sectors. The order calls for regulatory initiatives to address rail and ocean shippers’ concerns about high rates, unreasonable fees and poor service. It also directs the Department of Transportation (DOT) to bolster aviation consumer protections and foster competition in the area of emerging aviation technologies, impacting airlines, airports and the drone industry.

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The order reflects the Biden administration’s view that excessive industry consolidation across the economy is impairing economic growth and innovation, raising prices for consumers and reducing wages. Addressing the transportation sector, the administration describes the airline, freight rail and ocean shipping industries as dominated by large corporations that wield their market power to drive up their fees.

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Under the order, the administration lays out a “whole-of-government” competition policy that encourages federal agencies, including the Surface Transportation Board (STB), Federal Maritime Commission (FMC) and DOT, to adopt pro-competitive rules and policies. The order specifically identifies 72 initiatives for various federal agencies to address pressing competition issues.

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The order encourages the STB to address rail competition issues by:

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Unreasonable Ocean Demurrage and Detention Practices

The order encourages the FMC to adopt initiatives to address unjust and unreasonable practices related to detention and demurrage charges, which are fees ocean carriers charge U.S. importers and exporters for using ocean containers and storing cargo at ports beyond a free time period. During port congestion events currently and in recent years, there have been widespread concerns that carriers are assessing these charges even when shippers are unable to return containers or pick up their cargo for reasons beyond their control. The initiatives outlined for the FMC include:

The order directs the Secretary of Transportation to take actions to increase aviation consumer protections, promote more flight options for consumers and extend opportunities for airline competition and market entry, and facilitate U.S. leadership and market entry related to emerging aviation technologies and applications, like drones, advanced air mobility and high-altitude long-endurance operations. These actions include:

The order’s true impact will depend on how the implicated federal agencies implement the initiatives outlined in the order. In many cases, regulators will need to consider feedback from industry and other stakeholders when making regulatory changes to reflect the policy outlined in the order. Additionally, while federal agencies that are independent of the Biden administration, like the STB and FMC, are not compelled to follow the order, the current STB and FMC chairs have issued statements supporting it.

Karyn A. Booth 202.263.4108 <a href="mailto:Karyn.Booth@ThompsonHine.com">Karyn.Booth@ThompsonHine.com</a>

Sandra L. Brown 202.263.4101 <a href="mailto:Sandra.Brown@ThompsonHine.com">Sandra.Brown@ThompsonHine.com</a>

Tim Goodman 202.263.4117 <a href="mailto:Tim.Goodman@ThompsonHine.com">Tim.Goodman@ThompsonHine.com</a>

Jeff Moreno 202.263.4107 <a href="mailto:Jeff.Moreno@ThompsonHine.com">Jeff.Moreno@ThompsonHine.com</a>

David E. Benz 202.263.4116 <a href="mailto:David.Benz@ThompsonHine.com">David.Benz@ThompsonHine.com</a>

Dan Ujczo 614.469.3319 <a href="mailto:Dan.Ujczo@ThompsonHine.com">Dan.Ujczo@ThompsonHine.com</a>

Jason D. Tutrone 202.263.4143 <a href="mailto:Jason.Tutrone@ThompsonHine.com">Jason.Tutrone@ThompsonHine.com</a>

Kerem Bilge 202.263.4104 <a href="mailto:Kerem.Bilge@ThompsonHine.com">Kerem.Bilge@ThompsonHine.com</a>

Will Godfrey* 202.263.4119 <a href="mailto:Will.Godfrey@ThompsonHine.com">Will.Godfrey@ThompsonHine.com</a> *Director, Mobility, Automation and Safety; not licensed to practice law

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2022/04/Transportation_Update_-_EO_Targets_Rail_Ocean_and_Air_Transportation_Competition_and_Unreasonable_Practices.pdf

Executive Order Targets Rail, Ocean and Air Transportation Competition and Unreasonable Practices

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